Oil settles up $2 on tighter supply; OPEC+ talks limit gains

Date:

- Advertisement -

Oil prices settled up by over $2 per barrel on Wednesday on signs of tighter supply, a weaker dollar and optimism over a Chinese demand recovery.

Capping gains, the OPEC+ decision to hold its Dec. 4 meeting virtually signals little likelihood of a policy change, a source with direct knowledge of the matter told Reuters on Wednesday.

Brent crude futures settled up $2.40, or 2.8% to $85.43 per barrel while U.S. West Texas Intermediate (WTI) crude futures settled up $2.35, or 3.01%, to $80.55.

Support followed expectations of tighter crude supply.

U.S. crude oil stocks plunged by nearly 13 million barrels, the most since 2019, in the week ended Nov. 25, according to the Energy Information Administration.

But heating oil demand fell for the second consecutive week heading into winter, curbing price support.

“Running all that crude oil through the refinery, you’re going to process a lot of distillate … there is some reason for concern here,” said Bob Yawger, director of energy futures at Mizuho.

On the demand side, further support came from optimism over a demand recovery in China, the world’s largest crude buyer.

China reported fewer COVID-19 infections than on Tuesday, while the market speculated that weekend protests could prompt an easing in travel restrictions.

Guangzhou, a southern city, relaxed COVID prevention rules in several districts on Wednesday.

A fall in the U.S. dollar was also bullish for prices. A weaker greenback makes dollar-denominated oil contracts cheaper for holders of other currencies, and boosts demand.

Fed Chair Jerome Powell is scheduled to speak about the economy and labour market on Wednesday, with investors looking for clues about when the Fed will slow the pace of its aggressive interest rate hikes.

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Share post:

Subscribe

ADVERTISEMENT

Popular

More like this
Related

Ghana, creditor panel agree on debt restructuring, paving way for IMF cash

Ghana has finalised a pact with its official creditor...

Nigeria strikes deal with Shell to supply $3.8 billion methanol project

Nigeria has struck a deal for Shell (SHEL.L), opens new...

Africa’s $824 billion debt burden and opaque resource-backed loans hinder its potential, AfDB president warns

Africa's immense economic potential is being undermined by non-transparent...

IMF: South Africa needs decisive efforts to cut spending

South Africa needs more decisive efforts to cut spending...